Money or user satisfaction? the big question facing facebook

Facebook’s success stems from the fact it allows its users to control their information. But to make money, it appears to have to break this tradition

facebookTo paraphrase Oscar Wilde, to do one U-turn on your privacy policies may be a misfortune, but to do two U-turns on the same theme in little short of a year is extreme carelessness – if, that is, you want to build a trusted brand.

Fifteen months ago, Facebook chief executive Mark Zuckerberg issued a humiliating apology for the way his proposed Beacon advertising service “missed the right balance” of information sharing and privacy. Last week, he withdrew new terms of service which, on the face of it, gave Facebook complete ownership of everything its users post on its site, even after they’ve decided to withdraw it.

These antics matter, not because of a few privacy activists’ outrage or the worrying signs of incompetence at the top of an iconic company, but because they highlight a tension that’s coming to define our era. Facebook is a wonderful service and an extraordinary phenomenon to boot. It gives individuals fantastic tools to communicate and share information with each other. But Facebook is also sitting on a contradiction. On the one hand, everything about it reeks of consumer empowerment – putting control over their information in their hands. On the other hand, it needs to “”monetise”” its customer base somehow, which apparently involves taking control away from users and passing their information on to advertisers. If it plumps for one side, it can’t make enough money; if it plumps for the other it faces a brand-threatening outcry. So what to do? To see a possible answer to this question we need to step back a bit, and put these developments in context. At some point over the 25 years since Apple launched its Mac, marketing – a quintessential information-processing activity – has gone through a largely unnoticed tipping point.

Back in 1984, there was only one organised, professional information management activity – using information to further the purposes of the company. One sub-set of this was putting messages in front of eyeballs – advertising. That won’t ever go away. Today, however, the pivotal use of information – the use that really drives consumer value – is increasingly helping individuals use information as a tool in their own hands. This takes multiple forms, helping individuals communicate, express their creativity, make decisions, make plans and manage complex tasks and processes to get better, richer outcomes at lower cost. Facebook is a prime example of its appeal. One pointer: It took the telephone 89 years to reach a marketing penetration of 150 million users. TV reached the same milestone in 38 years. Facebook has done it in five.

The trouble is, viewing Facebook’s services and users through the lens of yesterday’s mental models – putting messages in front of eyeballs – blocks our ability to see its true potential. When Fortune magazine reports, for example, that corporations are “”salivating”” at Facebook’s potential to let them “”eavesdrop”” on every conversation its customers (and potential customers) have, it’s conjuring a vision not of win-win value creation but of a 1984-style nightmare. Yet, Facebook executives seem to believe this is the only way they can make money, which is why they can’t leave those privacy terms alone.

Keeping with this broader picture, the big challenge for marketers is not, and never has been, to put messages in front of eyeballs. For a time, that just happened to be a really good way of connecting with potential customers. But what matters is the connection, not the messaging.

So let’s forget about messaging for a moment and think about it from the consumer’s point of view. Consumers want to manage their information better, and that includes using information to connect with potential providers of value. Now run with this idea. The obvious way for Facebook to “monetise” its customer base in such a context is to accept the logic of its own service and to deploy its remarkable technologies and skills to help individuals get even more value from their information – by helping them monetise it for themselves.

Letting the user decide If Facebook personal profiles are so valuable to advertisers (e.g. for insight and targeting), then why doesn’t Facebook help individuals sell these profiles to advertisers in ways that they can control, taking a cut of the proceeds for its pains? Thus, for example, the profiling service could empower individuals to choose which advertisers to share their profile with (and which to exclude). It would let individuals decide what information to make available to which organisations, and what to keep private, and so on. It would also let advertisers indicate what information they would find valuable, thereby giving individuals the chance, and the incentive, to add this information to their profiles, to increase their chances of monetisation.

Likewise, if Facebook users’ attention is so valuable to advertisers for messaging purposes, then Facebook could help individuals sell this attention, once again giving its users the tools to choose which advertisers they want to receive messages from, when and how. This way, individuals would get the information they want rather than being spammed, while advertisers would know they were communicating with people who are really interested in the brand, product or service, while not having to waste huge amounts of money trying to communicate with people who are not.

Are there any objections or pitfalls to such an approach? You bet. There are a million and one ways to mess up the actual delivery of such “matching and connecting services”, for both sides of the equation. There are hordes of challenges in terms of making it easy to use, setting prices, making payments and introducing appropriate safeguards. There are countless ways for both sides to “”game”” the system, all of which need to be tackled. In other words, adopting such an approach would generate an urgent need to innovate. But Facebook is very good at innovating and this time, the innovations would be running with the grain of what it has already done, rather than against it.

How to make money in a world where information is a service to the consumer rather than a tool in the hands of the marketer? This debate is not unique to Facebook. To some degree or other, every marketer is now wrestling with the same issue. However, as long as you see this debate solely in terms of putting messages in front eyeballs (i.e. from the marketer’s perspective alone), you are guaranteed never to understand what’s really going on. 

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